Supply Chain Compliance and Regulatory Risk Mitigation

Transcription

1 Supply Chain Compliance and Regulatory Risk Mitigation 5 th World Halal Research Summit 2012,Kuala Lumpur Convention Centre, MALAYSIA,4-5 April M I C H A E L M U D D R E G I O N A L R E P R E S E N TAT I V E T H E O P E N C O M P U T I N G A L L I A N C E L O N D O N U K

2 Overview 2 The evolving supply chain The supply chain flow Some examples of the new paradigm Risk assessment Risk management The Unfair Competition Act Ways forward

3 a Generational Supply Chain Shift 3 Nearly all the Supply Chain within borders, stockpiling of raw materials Communications by Airmail, phone and Telex; Few Computers in Companies under 1000 people Risk easy to manage, single legal system, low country volatility risk Supply Chain distributed to border countries near shoring; lower inventories Communications by overnight /DHL/FedEx, Phone Fax machines; PC s in accounts/admin in companies under 500 people Risk getting more difficult to assess, differing laws but usually culturally similar, country risk now a fact Supply Chain is now global offshoring/near shoring /near sourcing/outsourcing Just in time inventories Communications by , IM direct; smart phones IT pervasive; linked ordering and manufacturing ERP systems Risk multiplied by the number of countries/facilities and contractors plus cultural risk Asia Policy Partners LLC

4 Medium Organisation-wide Business Impact High Focusing on suppliers to build shareholder value Purchasing Pioneers Next Practice Purchasing Improvers Catch Up Purchasing Leaders Operational Excellence Cost down Minimise value outflow Financial Impact Cost out Control value creation Functional Strategy The Improvers Operating Strategy The Leaders Business Strategy The Pioneers Warren Pescud

5 The Supply Chain Process Mission, Goals & Strategies Operational Needs & Goals, Strategies Category Objectives & Project Set-up Data Gathering Category Analysis Strategic Analysis & Option Generation Implement Agreed Strategy Procurement Process Manage Relationships for Value Defined Corporate Mandate / Vision Defined Business Objectives Supplier Sourcing Analysis Supplier Management Vision / Mission Statement Strategies Positioning Targets Measures Steering Group Prioritisation Business Source Risk Management - Management Process Situation / Target / Proposal Project Charter Team Facilities Project Governance Project Planning and Macro Planning Project Scope Action Planning Communication Planning Relationship Mapping (Internal) Project risk assessment Supply-Market Position Supplier Referencing Price & Cost Modelling Risk & Vulnerability Analysis Supply Value Chain Analysis Technology Mapping Make/Buy Analysis Category Analysis Supply Market Research Supplier Research Enquiry Documents (RFI/RFP/RFQ) Enquiry/Quotation Analysis Quick Wins Relationship Mapping (External) Balance of Power Performance Measurement (SLA s) Relationship Agreement Continuous Improvement Benchmarking Supplier Development Supplier Termination Reverse Marketing-sell the value Supplier Conditioning Project Mgmt Communication Negotiation Plan Decision Making process Contracting standards Confidentiality Agreements MOU/LOI/SLA (risk mitigation) Supplier Debriefing / Post Reviews 5

6 New Supply Chain Example Complex and Global Boeing The first mass jetliner. 98% made in the US 1950 s - 60 s. The Dreamliner Just delivered. 70% outsourced to 900 sub - contractors Half made by contractors outside the US - primarily Japan/ Italy but also China and other Asian Countries. Boeing does the final assembly. Boeing maintains the overall IP it s their innovation. Even with experienced management and technology this project was 3 years late and will take at least 1000 planes to break even. 6 Boeing Aircraft Co. Boeing Aircraft Co.

7 Boeing - A modern Supply Chain example 7 Boeing Aircraft Co.

8 That has a direct link to Risk The examples here show that with complexity there are risks in the supply chain that may or may not be anticipated This is also very relevant to the global Halal industry BUT how do you assess these risks... and then manage them? 8

9 Principles of risk management 9 Identify, characterize, and assess threats Assess the vulnerability of critical assets to specific threats Determine the risk outcome (i.e. the expected consequences of specific types of attacks on specific assets) Identify ways to reduce those risks Prioritize risk reduction measures based on a strategy Summarized from the ISO

10 Risk Assessment The ISS 10 NASA

11 Supply Chains External Risk example 11 Hi Tech raw materials 11 are in short supply Rare earths 97% produced in China Risk mitigation strategies; Stockpiling Forward buying Substitution Antimony

12 Supply Chain Risk Management An Overview? 12

13 Mitigating Supply Chain Risk Design a new business process with adequate built-in risk control and containment measures from the start. Periodically re-assess risks that are accepted in ongoing processes as a normal feature of business operations and modify mitigation measures. Transfer risks to an external agency (e.g. an insurance company) Avoid risks altogether (e.g. by closing down a particular high-risk business area) 13

14 How to Manage Compliance Risk Many companies are doing this already In the Halal food chain certifications are available based on inspection or audit as to integrity But what about the IT software used? Audits to an agreed standard will give you the certification needed to comply with regulations and need not be onerous May be implemented by existing organisations May be part of the regular export documentation process 14

15 Unfair Competition laws in the US The Attorney General or other parties my bring civil lawsuits in most US states Target are manufacturers who do not pay for the IT used in their processes This may be stolen or duplicated software UCA Applies to all in the supply /distribution chain Including those that hold stock Or who handle the products in any other way 15

16 But it goes further that just two States 16 November Attorney General s urged Washington D C to get involved January President Obama announces the creation of a Trade Enforcement Unit The U.S. Federal Trade Commission (FTC) Regulates trade by the Federal Trade Commission Act Section 5 ; unfair method of competition prohibition Unfair competition hurts law-abiding businesses Costing jobs and slowing economic recovery Urge action can be brought to bear on this problem.

17 How to Manage UCA Risk 17 Many companies are doing this already by simply ensuring they obey the IP laws of their country BUT the opportunity is to ensure their customers KNOW this by means of a verified audit Your customers will in fact start to demand this so as to minimize their risk Manufacturers may have too much IT so software management audits can actually reduce costs The incentive to reduce costs and an avoidable risk is clear; your customers will benefit

18 In Conclusion 18 Most companies have got the physical supply chain risks reasonably well sorted out. However the legal, regulatory and compliance issues of the last mile (legal and logistics) may be problematical for export markets. Compliance with existing IP laws will now give manufacturers an added competitive advantage in the global supply chain due to the new unfair competition laws The recent UCA law will benefit customers in the US by providing legal certainty of suppliers and will not be any more difficult than existing export certifications - customers will ask suppliers to comply. Those that are ready will get the business are you?

19 The OCA UK based global ICT industry policy think tank, with advocacy Members are technology leaders in Asia - Pacific economies Creating Dialogue on Policy Open Innovation Open Competition and Trade Open Standards Cloud Computing and Secure & Trusted IT Energy Efficient IT to drive positive outcomes for all stakeholders - both public and private

20 Thank you 20 M ICHAEL M UDD M M U D O P E N C O M P U T I N G A L L I A N C E. O R G W W W. O P E N C O M P U T I N G A L L I A N C E. O R G